Paying Corporation Tax to HMRC
Who pays HMRC corporation tax?
Taxable profits of a business include the earnings of the company from trading activities, business investments, and profitable gains. For a company based in the United Kingdom, it is liable to pay corporation tax on profits made from the UK business and abroad. Whereas, if the company is not based in the United Kingdom but has branch offices in the UK, it is only liable to pay the corporation tax on profits earned from the UK activities.
The Business Must Pay HMRC Corporation Tax on Profits Earned from Doing Business As:
Mandatory steps for a business for Corporation Tax
- When an individual starts dong business, he / she must register the business for corporation tax. Unincorporated associations should write to HMRC
- The business must keep accounting records and books of accounts. The business must prepare a company tax return to compute the payable corporation tax
- Pay the corporation tax due or report to HMRC if no tax is due by the due date. This is normally nine (9) months and one (1) day after the end of the accounting period
- File the company tax return before the deadline. This is normally 12 months post the end of the accounting period
HMRC Corporation tax payment deadline
The cut-off date for paying the HMRC corporation tax due depends upon the taxable profits.
What about the Interest rates for late and early payments?
Up-to £1.5 million taxable profit
The business must pay the corporation tax due or report to HMRC if no tax is due by the due date. This is normally nine (9) months and one (1) day after the end of the accounting period.
More than £1.5 million taxable profit
The business can pay the corporation tax in installments. In general, large companies can pay the corporation tax online by installments. A large company is defined as a company whose profits for an accounting period are more than £1.5 million at the end of the period. There are some exceptions. Some companies don’t have to pay by installments even if its profits exceed £1.5 million. This happens if either:
- The total liability amount for an accounting period is less than £10,000 (or if the accounting period is less than 12 months)
- The company’s profits for the accounting period does not go beyond £10 million and either of the following applies:
- At any time during the preceding 12 months, the company didn’t exist or did not have an accounting period
- For any accounting period which ended in the previous 12 months, either its annual rate of tax liability did not exceed £10,000 or its annual rate of profit didn’t exceed £1.5 million
If any of these conditions apply, the company is liable to pay tax in full by the normal payment due date
Pay Your Corporation Tax Bill
It is imperative that a company pays the tax due to the HMRC by the cut-off date. The HMRC may charge interest if the tax is not paid on time. On the other hand, HMRC will pay interest if they receive the tax early. The time period allowed depends on how the payment is made:
Same day or next day
- Telephone banking or online banking (Faster Payments)
Three (3) working days
- At the post office
- At the bank
- Online by debit or credit card
- Direct debit
Five (5) working days
- Direct debit
Note: Corporation tax cannot be paid by post. In case, the cut-off date falls on a weekend or on a bank holiday, the company must make sure that the payment reaches the HMRC one day prior to the holiday.
Bank details for online or telephone banking, CHAPS, Bacs
Companies can pay HMRC by CHAPS or BACS. Companies can use the 17-character corporation tax pay-slip reference for the accounting period they are paying for. The pay-slip reference number can be found on the pay-slip sent by HMRC, after the return was submitted or through the online HMRC account under view account -> accounting period.
|Account name||Sort code||Account number||CHAPS instruction|
|HMRC Cumbernauld||083210||12001039||CHAPS form - Cumbernauld|
|HMRC Shipley||083210||12001020||CHAPS form - Shipley|
Overseas account details are as follows:
|Account number (IBAN)||Bank identifier code (BIC)||Account name|
Multiple payments by CHAPS
It is possible to make multiple payments using CHAPS – An online CHAPS form can be used to make a single payment for multiple companies for the same accounting period
HMRC’s banking address is:
Barclays Bank PLC
1 Churchill Place, London
United Kingdom E14 5HP
Corporation Tax HMRC:
The online corporation taxation service can be used to file the organisation’s or limited company’s tax return with HMRC. Businesses can also use this service to file accounts together with Companies House. There might be occasion when the online service is slow during peak business hours. To use the HMRC Corporation Tax service companies need:
- User ID and password provided for Government Gateway
- Company accounts
- Ready calculation of Corporation Tax
- Supporting documents, such as claims for relief, if any
Business will need the Companies House password and authentication code, if accounts are filed jointly with the Companies House
Companies can create online account templates and can upload either:
- The limited company statutory accounts
- Accounts needs by the unincorporated association's rules
HMRC webinars, email alerts and videos
Companies can get supplementary help and support from HMRC through videos, e-mails, and webinars. They include information on:
- International trade
- Value added tax
- People employment / hiring staff
Corporation Tax Advisors – DNS ACCOUNTANTS
DNS Accountants is an experienced taxation and accounting firm in the United Kingdom, which offers entire range of corporation tax planning services for owner-managed businesses across the country. DNS helps businesses understand their tax structure and compute the amount of tax payable. The team at DNS comprises of Chartered Accountants, and accounting and MBA professionals that help clients with their tax credits and services such as bookkeeping, auto-enrolment, accounting, self-assessment, and payroll-management and business start-up. Employees / employers can use DNS Accountants online cloud-based accounting software, Nomisma Solution, helps businesses to have a better understanding of their corporation tax liability. The firm is very principled & delivers supreme customer service and client support.
DNS Accountants help clients focus on maximizing their wealth. It’s impractical to expect any small-business owner to have a comprehensive knowledge of tax and National Insurance rules, DNS Accountants work with businesses to work out their HMRC corporation tax dues and business tax planning.